Gymboree dips; National Surgical, IWCO break; GEO sets spread; Summit, AccentCare reveal talk

By Sara Rosenberg

New York, Feb. 1 - Gymboree Corp.'s term loan started heading down towards par on news that the debt will be refinanced with a covenant-light deal, and price talk on the new loan started making its way around the market.

Back on the topic of the secondary market, National Surgical Hospitals Inc.'s credit facility freed up for trading, with levels on its strip of term loan debt quoted above the original issue discount price, and IWCO Direct Inc. broke as well.

In more happenings, GEO Group firmed the spread on its credit facility at the tight end of talk, Summit Entertainment LLC and AccentCare Inc. came out with price talk on their deals in connection with their launches, and MotorCity Casino Hotel disclosed its original issue discount guidance.

Also, Revel Entertainment Group LLC made a number of changes to its bank deal, including upsizing the first-lien term loan while lowering the spread and Libor floor and eliminating the second-lien term loan.

Furthermore, Walter Energy Inc. nailed down timing on the retail launch of its term loan B, and AVG Technologies, Vantage Oncology Inc. and Global Cash Access Inc. emerged with plans to bring new deals to market.

Gymboree softens

Gymboree's term loan moved down to par ¼ bid, par ¾ offered from 101¼ bid, 101 5/8 offered as word surfaced that the company will be launching a refinancing transaction with a conference call at 2 p.m. ET on Wednesday, according to a trader.

Credit Suisse is the lead bank on the deal.

The proposed $820 million term loan B will be covenant-light, whereas the existing deal includes maintenance covenants.

The existing loan does have 101 soft call protection for one year, but it will not apply in this case since the company is not lowering the yield with the refinancing, a source explained.

Gymboree reveals talk

Price talk on Gymboree's proposed term loan B is Libor plus 412.5 basis points with a 1.5% Libor floor, and it is being offered at par, the source continued.

By comparison, pricing on the existing B loan is Libor plus 400 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 991/2.

The existing loan was obtained in November when the company was acquired by Bain Capital Partners LLC.

Gymboree is a San Francisco-based specialty retailer.

National Surgical frees up

National Surgical Hospitals' credit facility hit the secondary market on Tuesday, with the strip of funded and delayed-draw term loans quoted at 99½ bid on the open, and then it moved up to par bid, 101 offered, according to a source.

Both the $170 million six-year term loan and $30 million six-year delayed-draw term loan are priced at Libor plus 650 bps with a 1.75% Libor floor and were sold at a discount of 98. The funded term loan includes 101 hard call protection for one year and the delayed-draw is available for 18 months.

During syndication, pricing on the loans was increased from Libor plus 550 bps, the discount widened from 99, the call protection was added, and the delayed-draw period was shortened from two years.

National Surgical revolver

National Surgical's $220 million senior secured credit facility (B2/B) also includes a $20 million five-year revolver.

Jefferies is the lead bank on the deal that will be used to help fund the buyout of the company by Irving Place Capital. There will be about 40% equity as part of the funding for the transaction.

At close, senior and total leverage will be around 4 times.

National Surgical Hospitals is a Chicago-based owner, operator and developer of surgical hospitals and surgery centers in partnership with local physicians.

IWCO starts trading

IWCO Direct's term loan due August 2014 freed up as well, with levels quoted at 85 bid, 86 offered, according to a market source.

The loan, which was obtained in 2007 to fund the company's buyout by Avista Capital Partners, is priced at Libor plus 337.5 bps. It was just sold down now at an original issue discount of 85, after widening from talk in the high 80s to low 90s area.

Initially, the term loan was sized at $250 million. As of Sept. 30, however, it was sized at $243 million.

Deutsche Bank is the lead bank on the deal.

IWCO is a Chanhassen, Minn., provider of direct marketing services.

GEO sets pricing

In other news, GEO Group firmed pricing on its a $100 million revolver and a $150 million term loan A-2 at Libor plus 275 bps, the low end of the initial Libor plus 275 bps to 300 bps talk, according to a market source. There is still no Libor floor.

The tranches are being sold as a strip to a target audience of banks, not institutional investors, and syndication is "going well," the source said.

BNP Paribas is the lead bank on the $250 million credit facility (Ba3/BB) that will be used, along with $250 million of senior notes, to fund the acquisition of Behavioral Interventions Inc., a Boulder, Colo.-based provider of electronic monitoring services, for $415 million in an all-cash transaction.

GEO, a Boca Raton, Fla.-based provider of correctional, detention and residential treatment services, expects to close on the transaction on Feb. 10.

Summit discloses guidance

Summit Entertainment held a bank meeting on Tuesday morning to kick off syndication on its proposed credit facility, and in connection with the launch, price talk was announced, according to a market source.

The $600 million seven-year term loan is being talked at Libor plus 525 bps to 550 bps with a 1.5% Libor floor and an original issue discount of 981/2, the source said.

The company's $800 million senior secured credit facility (B1/B) also includes a $200 million five-year revolver.

JPMorgan and UBS are the co-lead arrangers on the deal that will be used to repay existing debt, for working capital needs and general corporate purposes and to fund a dividend.

Summit Entertainment is a Santa Monica, Calif.-based independent film studio.

AccentCare talk emerges

Also launching with a bank meeting on Tuesday morning was AccentCare's $205 million senior secured credit facility, at which time it too released price talk, according to a market source.

Both the $25 million revolver and the $180 million term loan are being talked at Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 981/2, the source said.

When asked whether AccentCare was expected to see the same fate as a number of other deals that have been helped by the strong primary market, the source was not sure.

"As Weather Channel, Burger King and SunGard prove, investors will do almost anything to avoid repayments. AccentCare is a different animal - more middle market and home health is tough," the source responded.

"BMO and Madison Capital [are] still long on Preferred Homecare. They funded the deal and not done selling it," the source added.

AccentCare lead banks

GE Capital, Bank of Ireland and CIT are the joint lead arrangers on AccentCare's credit facility, with GE the left lead.

Commitments are due from lenders in two weeks.

Proceeds will be used to help fund the buyout of the company by Oak Hill Capital Partners.

The company will then be merged with Guardian Home Care Holdings Inc., a Brentwood, Tenn.-based provider of homecare and hospice services that was recently acquired from Friedman Fleischer & Lowe.

AccentCare is an Irvine, Calif.-based provider of home health care services.

MotorCity floats OID

MotorCity Casino Hotel was yet another company to hold a bank meeting during market hours, and original issue discount talk on the term loan was revealed in connection with the event, a source told Prospect News.

The $615 million six-year B loan is being offered to investors at a discount of 991/2, the source remarked. As was previously reported, price talk is Libor plus 525 bps with a 2% Libor floor.

The company's $635 million credit facility (B+) also includes a $20 million five-year revolver.

Bank of America and Citadel are leading the deal that will be used to refinance existing debt.

MotorCity Casino Hotel is a casino in Detroit.

Sedgwick launches

As expected, Sedgwick Claims Management Services Inc. launched its $600 million amended and restated term loan B due Dec. 31, 2016 on Tuesday with talk of Libor plus 375 bps with a 1.5% Libor floor and a par offer price, according to a market source. There is 101 soft call protection for six months.

Bank of America and Barclays are leading the deal that will be used to help fund the acquisition of Specialty Risk Services LLC, a third-party claims administrator, from the Hartford Financial Services Group Inc. for $278 million in cash and to refinance an existing $400 million first-lien term loan B.

Pricing on the existing term loan B is Libor plus 400 bps with a 1.5% Libor floor. It was sold at an original issue discount of 99 in 2010.

Sedgwick, a Memphis, Tenn.-based provider of claims and productivity management services to corporate and institutional clients, expects to close on the acquisition during the first quarter, subject to regulatory approval and other required consents.

Revel reworks deal

Revel Entertainment told lenders on Tuesday that it upsized its six-year first-lien term loan B (B) to $850 million from $700 million, lowered pricing to Libor plus 750 bps from Libor plus 800 bps and cut the Libor floor to 1.5% from 2%, while leaving the original issue discount unchanged at 981/2, according to a market source.

In addition, call protection on the loan was changed to non-callable for two years, then at 102 in year three and 101 in year four, from non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

As a result of the first-lien upsizing, the $150 million 61/2-year second-lien term loan was eliminated from the capital structure. This tranche was talked at Libor plus 1,100 bps with a 2% floor and a discount of 98. It was non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

Revel second time a charm

The Revel credit facility had to be relaunched in January, which has proven to be a successful choice, after its first approach to the market didn't go so well.

In November, the company had launched a $1.287 billion deal, consisting of an $800 million first-lien loan talked at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 98 and a $472 million second-lien loan talked at 12.5% with a discount of 97.

The first-lien loan was non-callable for one year, then at 103 in year two, 102 in year three, and 101 in year four, while the second-lien was non-callable for three years, then at 106 in year four, 103 in year five and 101½ in year six.

Later in the syndication process, pricing on the first-lien term loan has been changed to Libor plus 825 bps and the discount widened to 97, but investors were hesitant to get involved as they were hoping for some sort of junior debt to decrease the bank deal - a worry that is has was addressed with the relaunch.

Revel ups mezzanine

Revel also revealed on Tuesday that it increased its mezzanine financing to $305 million from $295 million, and that the tranche will be secured by ERGG escrow proceeds, the source continued.

The incremental borrowing of about $10 million is due to pre-funding of first-lien term loan interest, the source explained.

Proceeds from the term loan and the mezzanine will be used to help fund the construction of a casino and hotel in Atlantic City, N.J.

JPMorgan is the lead bank on the term loan for the gaming and entertainment company.

Rockwood trims pricing

Also in the primary, Rockwood Holdings Inc. lowered pricing on its $180 million five-year revolver and $850 million seven-year term loan to Libor plus 275 bps from Libor plus 300 bps, while leaving the 1% Libor floor intact, according to sources.

Pricing on the term loan can now step down to Libor plus 250 bps at less than 2 times net total leverage, and the tranche is being offered at par, instead of at 991/2. There is still 101 soft call protection for one year.

The revolver continues to be offered at an original issue discount of 99, sources added.

Credit Suisse, Deutsche Bank, Morgan Stanley, UBS and KKR are the lead banks on the $1.03 billion credit facility (Ba1/BBB-/BB+) that will be used to refinance existing bank debt.

Rockwood is a Princeton, N.J.-based specialty chemicals and advanced materials company.

Avaya ups spread

Avaya Inc. revised pricing as well, but its spread was moved higher on the proposed extended term loan ahead of the Tuesday consent deadline, according to a market source.

The extended loan is now being offered at Libor plus 450 bps, up from earlier talk of Libor plus 425 bps, the source said. Pricing on the non-extended term loan B-1 is Libor plus 275 bps.

In addition, the extended loan now has 101 soft call protection for one year and the amendment fee was increased to 25 bps to 10 bps, the source continued.

As was previously reported, under the amendment and extension proposal, the company is looking to extend 50% of its term loan B-1 to 2017 from 2014. As of Sept. 30, there was $3.662 billion outstanding under the term loan B-1.

Avaya seeks debt basket

In addition, Avaya's amendment would carve out a basket to allow for additional senior secured debt in the form of loans or bonds and the company would have the option to use that debt to repay whichever term loan tranche it wants first.

Some investors expect that the term loan B-2 would be paid down first, then the B-1 and then the B-3.

Citigroup, JPMorgan and Morgan Stanley are the lead banks on the amend and extend.

Avaya is a Basking Ridge, N.J.-based enterprise communications systems, software and services company.

Walter readies B loan

Walter Energy zeroed in on timing for the launch of its $1.75 billion seven-year term loan B to retail investors with the scheduling of a conference call for 1:30 p.m. ET on Thursday, according to a market source, who said that price talk is expected to come out with the call.

The company already held a senior managing agent meeting on Jan. 20, at which time it launched its $375 million five-year revolver and $600 million five-year term loan A with talk of Libor plus 300 bps. The revolver has a 50 bps unused fee.

Morgan Stanley, Credit Agricole and the Bank of Nova Scotia are the lead arrangers on the $2.725 billion senior secured deal that will be used to help fund the acquisition of Western Coal Corp. for C$11.50 per share, to refinance existing debt and for working capital.

Walter Energy is a Tampa, Fla.-based producer and exporter of metallurgical coal for the steel industry. Western Coal is a Vancouver, B.C.-based producer of metallurgical coal.

AVG coming soon

AVG Technologies has scheduled a bank meeting for Thursday to launch a proposed $235 million five-year term loan, according to sources.

JPMorgan is the lead bank on the deal that will be used to refinance existing debt and fund a dividend payment.

AVG is a Chelmsford, Mass.-based security software maker.

Vantage launch next week

Vantage Oncology has set a bank meeting for Feb. 10 to launch a new $246 million senior secured credit facility that is being led by Jefferies and SunTrust and will consist of a $25 million five-year revolver and a $221 million six-year term loan B, according to a market source.

Proceeds will be used to help fund the acquisition of the company by Oak Hill Capital Partners and its portfolio company, Physicians Oncology Services LP, an Atlanta-based operator of outpatient radiation oncology centers.

Total leverage will be roughly 4 times based on LTM Sept 30, 2010 pro forma combined EBITDA of $58.8 million.

Vantage Oncology is a Manhattan Beach, Calif.-based owner and operator of radiation oncology centers.

Global Cash deal surfaces

Global Cash Access has scheduled a bank meeting for Thursday to launch a proposed $210 million term loan B, according to a market source.

Deutsche Bank and Wells Fargo are the lead banks on the deal that will be used to refinance existing debt.

Global Cash Access is a Las Vegas-based provider of cash access services to the gaming industry.

Houghton closes

Houghton International Inc. completed its acquisition of Royal Dutch Shell plc's Metalworking and Metal Rolling Oils business, a specialty fluids manufacturer, according to a news release.

To help fund the transaction and refinance debt, Houghton got a new $500 million senior secured credit facility (B1/B), consisting of a $450 million term loan B and a $50 million revolver, with both priced at Libor plus 500 bps with a 1.75% Libor floor. The term loan B was sold at a discount of 99½ and has 101 soft call protection for one year.

During syndication, the term loan B was upsized from $315 million as mezzanine debt was eliminated from the capital structure, and the original issue discount was tightened from 981/2.

Deutsche Bank, Bank of Ireland and GE Capital acted as the joint lead arrangers on the deal for the Valley Forge, Pa.-based developer and producer of specialty chemicals, oils and lubricants for the metalworking, automotive, steel and aluminum industries.

Centene wraps revolver

Centene Corp. completed its $350 million five-year unsecured revolving credit facility, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Pricing is Libor plus 250 bps with a 37.5 bps unused fee.

Barclays and Bank of America acted as the joint lead arrangers and bookrunners on the deal that was used to refinance existing debt and for general corporate purposes.

Centene is a St. Louis-based multiline health care company.

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